IMPORTANT POINTS
(1) Post-award interest – If agreement stipulates that no interest is payable, Arbitral Tribunal cannot award interest for the period and an award contrary to terms of contract would be vulnerable to a challenge under Section 34 of Arbitration and Conciliation Act, 1996.
(2) Award of interest pendente lite on sum awarded – Sustainability – Arbitral Tribunal can be denuded of its power to award pendente lite interest only if agreement/ contract between parties is so worded that award of pendente lite interest is either explicitly or by necessary implication barred.

JUDGMENT :

MANOJ MISRA, J.

1. Leave granted. This appeal arises from a judgment and order of the Gauhati High Court¹[The High Court] dated 08.03.2019, whereby the appeal (i.e., Arb. A 3/2007) of the respondent, under Section 37 of the Arbitration and Conciliation Act, 1996²[1996 Act], was allowed, the judgment and order of the District Judge, Sivasagar, dated 15.11.2007, in Misc. Arb Case No.26 of 2005, under Section 34 of 1996 Act, was set aside and the arbitral award dated 21.11.2004 was affirmed.

FACTS

2. Facts relevant for deciding this appeal are that the appellant suffered an arbitral award, dated 21.11.2004, passed by a three member arbitral tribunal, which directed as follows:

“1. Preliminary objection as to maintainability of the present arbitration proceeding raised on behalf of the respondent ONGC, is rejected.

2(i) Claim No.2 relating to the 2nd invoice for dollar 20,729.17 being the outstanding balance is allowed rejecting the claim for interest thereon.

2(ii) Claim No.3 in respect of invoice No.3 for dollar 1,26,536.44 being unpaid balance is allowed without interest.

2(iii) Claim No.4 in respect of invoice No.4 for dollar 30,1401.05 being outstanding balance is allowed. Claim for interest is, however, rejected.

2(iv) Claim No.5 in respect of invoice No.5 for dollar 14,321.68 being the outstanding balance is allowed without interest.

2(v) Claim No.6 in respect of invoice No.6 of dollar 1,67,960.43 being outstanding balance is allowed but no interest is allowed.

2(vi) Claim No.7 in relation to invoice No.7 for dollar 87,523.37 being the unpaid balance is allowed and the claim for interest on the said amount is disallowed.

2(vii) Claim No.8 refers to invoice No.8 for dollar 60,000 is allowed without interest.

2(viii) Claim No.9 in respect of invoice No.9 for dollar 78,750 being 75% of the tools lost in hole is allowed without any interest.

2(ix) Claim No.10 vide invoice No.10 for dollar 15,000 in respect of charges for demobilization is allowed without any interest.

2(x) Claim for performance-bond amount of dollar 55,050 is allowed as the said sum was deducted improperly without any justification.

3. Accordingly, an award for the total amount of dollar 6,56,272.34 is passed in favour of the Claimant G & T BecField Drilling Services (P) Ltd against the Respondent, Oil & Natural Gas Corporation Ltd..

4. The said sum will carry interest at the rate of 12% per annum on and from 12/12/1998, the date when the statement of claim was affirmed, till recovery of the said amount and an Award for interest on the said amount is made accordingly.

5. The claimant will be entitled to Costs of the Proceeding assessed at Rs.5 (five) lakhs only from the Respondent, ONGC, and an Award for Rs.5 (five) lakhs for Costs is accordingly passed. Counter-Claims are dismissed.

Sd/- 1. …. ; 2. ….; 3. …. Dt/- 21.11.2004”

3. Aggrieved by the award, the appellant filed an application (i.e., Misc. (Arbitration) Case no.26 of 2005), under Section 34 of 1996 Act, for setting aside the award by taking various pleas including the one that clause 18.1 of the agreement does not allow payment of interest on the claim.

4. The District Judge allowed the application and set aside the award, vide order dated 15.11.2007, inter alia, on two grounds: (a) the award is non-reasoned, therefore, violates the mandate of Section 31(3) of 1996 Act; and (b) objection under Section 16(2) was neither rejected prior to proceeding further, nor considered by the arbitral tribunal at the time of making final award.

5. Aggrieved therewith, respondent filed an appeal before the High Court under Section 37(1)(c) of 1996 Act, which was allowed by the impugned judgment and order thereby affirming the arbitral award in toto.

6. When notices were issued on the Special Leave Petition, seeking leave to appeal against the impugned order, it was limited to the extent as to whether interest on the total amount at the rate of 12 per cent could be awarded or not. The order dated 25.11.2019, issuing notice, is r